Question 1

When a firm increases all its inputs by 20 percent and its output rises by 15 percent,it is said to be experiencing ________ returns to scale.

Accepted Answer

A)  average 
B)  explicit 
C)  increasing 
D)  constant 
E)  decreasing 
A)  average 
B)  explicit 
C)  increasing 
D)  constant 
E)  decreasing

Question 2

The following schedule shows the utility Mr. Pomeroy derives from consumption of various amounts of food per day. Use it to answer the next question.
  
-If the marginal utilities from consuming the first five units of a commodity are 10,16,15,12,and 9,respectively,then the total utility received from consuming 4 units is

Accepted Answer

A)  12. 
B)  27. 
C)  41. 
D)  53. 
E)  62. 
A)  12. 
B)  27. 
C)  41. 
D)  53. 
E)  62.

Question 3

In a market economy,firms decide what and how much to produce on the basis of their

Accepted Answer

A)  income, tastes, and market supplies. 
B)  marginal and average utilities. 
C)  humanitarian ideals. 
D)  costs and what they can charge for their products. 
E)  orders from a central government planning bureau. 
A)  income, tastes, and market supplies. 
B)  marginal and average utilities. 
C)  humanitarian ideals. 
D)  costs and what they can charge for their products. 
E)  orders from a central government planning bureau.

Question 4

In general,what percentage of their income do U.S.households spend on goods and services?

Accepted Answer

A)  27 percent 
B)  32 percent 
C)  64 percent 
D)  81 percent 
E)  96 percent 
A)  27 percent 
B)  32 percent 
C)  64 percent 
D)  81 percent 
E)  96 percent

Question 5

Utility is a measure of

Accepted Answer

A)  output. 
B)  usefulness. 
C)  satisfaction. 
D)  indifference. 
E)  demand. 
A)  output. 
B)  usefulness. 
C)  satisfaction. 
D)  indifference. 
E)  demand.

Question 6

Cost divided by output is ________ cost.

Accepted Answer

A)  marginal 
B)  average 
C)  total 
D)  deflated 
E)  sunk 
A)  marginal 
B)  average 
C)  total 
D)  deflated 
E)  sunk

Question 7

Which best expresses the relationship between the market and individual demand curves?

Accepted Answer

A)  The market demand curve is an average of all individual demand curves. 
B)  The market demand curve is constructed by multiplying the price times the quantity demanded by each consumer and summing the results. 
C)  The market demand curve is found by adding the quantities demanded by each consumer at each possible price. 
D)  The market demand curve sums the prices each individual is willing to pay for a given quantity. 
E)  Individual demand curves can be found by dividing the market demand by the number of buyers. 
A)  The market demand curve is an average of all individual demand curves. 
B)  The market demand curve is constructed by multiplying the price times the quantity demanded by each consumer and summing the results. 
C)  The market demand curve is found by adding the quantities demanded by each consumer at each possible price. 
D)  The market demand curve sums the prices each individual is willing to pay for a given quantity. 
E)  Individual demand curves can be found by dividing the market demand by the number of buyers.

Question 8

The following question are based on the following graph:
  
-As consumption is increased from 5 to 7 units,marginal utility is

Accepted Answer

A)  rising. 
B)  falling. 
C)  constant. 
D)  zero. 
E)  negative. 
A)  rising. 
B)  falling. 
C)  constant. 
D)  zero. 
E)  negative.

Question 9

Those who exchange their labor resources for money to buy goods and services to satisfy their wants and desires are called

Accepted Answer

A)  capitalists. 
B)  firms. 
C)  corporations. 
D)  rentiers. 
E)  consumers. 
A)  capitalists. 
B)  firms. 
C)  corporations. 
D)  rentiers. 
E)  consumers.

Question 10

Which of the following short-run cost curves generally declines,then rises as output is increased?

Accepted Answer

A)  average fixed cost and average variable cost 
B)  average variable cost and average total cost 
C)  average total cost and average fixed cost 
D)  average fixed cost only 
E)  average variable cost only 
A)  average fixed cost and average variable cost 
B)  average variable cost and average total cost 
C)  average total cost and average fixed cost 
D)  average fixed cost only 
E)  average variable cost only

Question 11

In the model of consumer behavior

Accepted Answer

A)  individuals can choose whatever market basket they want. 
B)  individuals are capable of making consistent choices reflecting their preferences. 
C)  for most commodities, total utility falls steadily as more is consumed. 
D)  an individual's desire for a specific good in a given time period is infinite. 
E)  marginal utility at first decreases, then increases. 
A)  individuals can choose whatever market basket they want. 
B)  individuals are capable of making consistent choices reflecting their preferences. 
C)  for most commodities, total utility falls steadily as more is consumed. 
D)  an individual's desire for a specific good in a given time period is infinite. 
E)  marginal utility at first decreases, then increases.

Question 12

Difficulties in coordinating and transmitting information in a large firm can lead to

Accepted Answer

A)  increasing returns to scale. 
B)  falling long-run marginal cost curves. 
C)  L-shaped long-run average total cost curves. 
D)  decreasing returns to scale. 
E)  linear total cost functions. 
A)  increasing returns to scale. 
B)  falling long-run marginal cost curves. 
C)  L-shaped long-run average total cost curves. 
D)  decreasing returns to scale. 
E)  linear total cost functions.

Question 13

Which of the following factors was probably most significant in putting an end to the designer jeans fad?

Accepted Answer

A)  Prices got so high that people stopped buying designer jeans. 
B)  Producers failed to advertise enough to promote this new product effectively. 
C)  So many consumers bought designer jeans that they lost their uniqueness. 
D)  The quality of the product declined as more firms entered the market. 
E)  Supply decreased because of the energy crisis. 
A)  Prices got so high that people stopped buying designer jeans. 
B)  Producers failed to advertise enough to promote this new product effectively. 
C)  So many consumers bought designer jeans that they lost their uniqueness. 
D)  The quality of the product declined as more firms entered the market. 
E)  Supply decreased because of the energy crisis.

Question 14

The following schedule shows the utility Mr. Pomeroy derives from consumption of various amounts of food per day. Use it to answer the next question.
  
-If he consumes 2 pounds of food per day,his marginal utility is

Accepted Answer

A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  9. 
A)  2. 
B)  3. 
C)  4. 
D)  5. 
E)  9.

Question 15

The Glow-in-the-Dark Lamp Company produces 3.2 million light bulbs per year at a per unit cost of $0.50.If its total variable cost is $1.2 million,its

Accepted Answer

A)  marginal cost is $0.375. 
B)  total fixed cost is $400,000. 
C)  average variable cost is $0.50. 
D)  total cost is $6.4 million. 
E)  average fixed cost is $0.40. 
A)  marginal cost is $0.375. 
B)  total fixed cost is $400,000. 
C)  average variable cost is $0.50. 
D)  total cost is $6.4 million. 
E)  average fixed cost is $0.40.

Question 16

The basic difference between explicit and implicit costs is that

Accepted Answer

A)  explicit costs are measurable; implicit costs are not. 
B)  implicit costs are measurable; explicit costs are not. 
C)  explicit costs are private costs; implicit costs are social costs. 
D)  explicit costs are fixed costs; implicit costs are variable costs. 
E)  explicit costs reflect externally supplied resources; implicit costs reflect owner-supplied resources. 
A)  explicit costs are measurable; implicit costs are not. 
B)  implicit costs are measurable; explicit costs are not. 
C)  explicit costs are private costs; implicit costs are social costs. 
D)  explicit costs are fixed costs; implicit costs are variable costs. 
E)  explicit costs reflect externally supplied resources; implicit costs reflect owner-supplied resources.

Question 17

The distinction between the short run and the long run is

Accepted Answer

A)  strictly a calendar matter; the long run is over 10 years. 
B)  dependent solely on the time period necessary to vary all relevant inputs. 
C)  that, in the short run, neither inputs nor outputs can be changed. 
D)  that the law of diminishing marginal returns is operational in the long run but not in the short run. 
E)  operationally meaningless since firms continually plan for the future. 
A)  strictly a calendar matter; the long run is over 10 years. 
B)  dependent solely on the time period necessary to vary all relevant inputs. 
C)  that, in the short run, neither inputs nor outputs can be changed. 
D)  that the law of diminishing marginal returns is operational in the long run but not in the short run. 
E)  operationally meaningless since firms continually plan for the future.

Question 18

After some point,each additional unit of output requires more units of a variable input than the previous unit,causing

Accepted Answer

A)  marginal cost to rise. 
B)  fixed cost to rise. 
C)  total cost to rise at a decreasing rate. 
D)  total variable cost to rise at a decreasing rate. 
E)  output to rise at an increasing rate. 
A)  marginal cost to rise. 
B)  fixed cost to rise. 
C)  total cost to rise at a decreasing rate. 
D)  total variable cost to rise at a decreasing rate. 
E)  output to rise at an increasing rate.

Question 19

Short-run costs that do not change as output increases or decreases are ________ costs.

Accepted Answer

A)  explicit 
B)  fixed 
C)  empirical 
D)  marginal 
E)  primary 
A)  explicit 
B)  fixed 
C)  empirical 
D)  marginal 
E)  primary

Question 20

The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices:
  
-If the price of the game is $1.99,the quantity demanded will be

Accepted Answer

A)  one. 
B)  two. 
C)  three. 
D)  four. 
E)  five. 
A)  one. 
B)  two. 
C)  three. 
D)  four. 
E)  five.

Exam 4: Getting Behind the Demand and Supply Curves

When a firm increases all its inputs by 20 percent and its output rises by 15 percent,it is said to be experiencing ________ returns to scale.

In a market economy,firms decide what and how much to produce on the basis of their

In general,what percentage of their income do U.S.households spend on goods and services?

Utility is a measure of

Cost divided by output is ________ cost.

Which best expresses the relationship between the market and individual demand curves?

The following question are based on the following graph: -As consumption is increased from 5 to 7 units,marginal utility is

Those who exchange their labor resources for money to buy goods and services to satisfy their wants and desires are called

Which of the following short-run cost curves generally declines,then rises as output is increased?

In the model of consumer behavior

Difficulties in coordinating and transmitting information in a large firm can lead to

Which of the following factors was probably most significant in putting an end to the designer jeans fad?

The following schedule shows the utility Mr. Pomeroy derives from consumption of various amounts of food per day. Use it to answer the next question. -If he consumes 2 pounds of food per day,his marginal utility is

The Glow-in-the-Dark Lamp Company produces 3.2 million light bulbs per year at a per unit cost of $0.50.If its total variable cost is $1.2 million,its

The basic difference between explicit and implicit costs is that

The distinction between the short run and the long run is

After some point,each additional unit of output requires more units of a variable input than the previous unit,causing

Short-run costs that do not change as output increases or decreases are ________ costs.

The following question are based on the following information. Five adolescents are willing to buy the latest iPhone game at these prices: -If the price of the game is $1.99,the quantity demanded will be

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Market Demand and Price Elasticity

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

Filters